Archive for November, 2011

I recently read Reckless Endangerment: How Outsized Ambition, Greed, and Corruption Led to Economic Armageddon by Gretchen Morgensen and Josh Rosner. The authors (Morgensen, a New York Times Pulitzer Prize-winning columnist, and Rosner, the Managing Director at the independent research consultancy Graham Fisher & Co who advises regulators and institutional investors on housing and mortgage finance issues) do an excellent job of breaking down this complex topic into understandable terms. They reveal how the financial meltdown emerged from the corrupt practices, not only of Fannie Mae executives, but also of enablers at Countrywide Financial, Goldman Sachs, the Federal Reserve, HUD, Congress, the FDIC, and the biggest players on Wall Street, which led countless officials to ignore warning signs of an imminent disaster.

As I read the book, I couldn’t help but draw parallels between the factors that caused the mortgage crisis and what is currently happening in the national education reform movement. During the past two years, the Bullraker blog has been filled with posts trying to warn readers of the consequences of some of the reforms (e.g. privately-run, publicly funded charter schools and digital learning environments), which have far less educational value to students than financial value to investors, tech companies, and politicians.

However, since most of my rants seem to have fallen on deaf ears, I sometimes wonder if the sky isn’t actually falling. That is, until I read things like this excerpt from the epilogue to Reckless Endangerment:

In the fall of 2007, Johnson returned to his old playbook. It was a time for another partnership, he said, in which the public sector and private industry would join hands for the greater good. A Blueprint for American Prosperity, designed to bolster America’s cities, was put forward by Brookings in November 2007. Promotional materials for the push sounded remarkably like the homeownership push made a dozen years earlier.

The Blueprint was “a multi-year initiative aimed at creating a new Federal partnership with state and local leaders and with the private sector to advance American prosperity,” Johnson announced at its launch in Washington. “The ability of the United States to compete globally and to meet the great environmental and social challenges of the 21st century rest largely on the health, vitality and prosperity of the nation’s major cities and metroplitan areas.”

Many of the same figures were on hand for this launch who had been standing alongside Johnson twelve years earlier. Henry Cisneros, the former HUD director who had sat on the board of KB Homes with Johnson and had overseen Clinton’s National Partners in Homeownership a little more than a decade before, delivered the keynote address at the Blueprint’s launch. Brookings created a Metropolitan Leadership Council to help promote the agenda; its members included Johnson, of course, but also executives from Goldman Sachs and Target.

The Johnson referred to above is one of the most vile of the book’s villians: James A. Johnson, the former CEO of Fannie Mae and former director of Goldman Sachs and KB Home, who is now chair emeritus at the Brookings Institute. It should then come as no surprise what types of reforms Brookings is calling for in education… But yet hardly anyone locally seems concerned about the validity of the reforms. How can that be? Do people not see the connection? Are they too afraid to ask the critical questions? I don’t know, but the longer citizens go without a conversation about the inner workings of these large private-public partnerships, the more vulnerable we will be when the next economic bubble pops.

As for me, I may be going crazy but at least I’ve become bold enough to occupy the board room. Meanwhile, I highly recommend Reckless Endangerment to anyone who doesn’t understand what 99% of America is so upset about, or how inside baseball is played at the highest levels… And, no, I’m not talking about Old Hoss! 🙂